Unsecured Business Line of Credit for Closed Business, cannot keep up payments

Memphis, TN | March 18, 2009 6:25pm

I started a business about 5 years ago; used an unsecured line of credit of $40k. Since then, the business has gone out of business and I don't get any income from it. I have been paying on the line of credit every month for the last 3 years the business has been closed and haven't missed a payment. Since I can only afford to pay the interest the balance isn't getting reduced. I have a little bit of money at the bank where I got the LOC, but I am not going to be able to keep up payments much longer and I am more than likely just going to stop paying on it. My home has no equity but my car and truck are paid for. What should I do? What options do I have? What can the bank do?

I am currently employed full time so I make ends meet, but making the payment on a closed business on a debt that isn't shrinking is virtually killing me! I'm pretty sure I was the personal guarantor on the business line, but the business itself had its own EIN and the debt doesn't show up on my personal credit report. I'm assuming that the bank will seize my account after i stop paying the debt, so I will probably move my funds to another bank first. Is there a better way? Will they try to garnish my personal wages as well or write it off as a loss? Please help because I'm running out of time and money. Thanks!

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I would suggest that you contact the bank and schedule an appointment to sit down and go over your situation with them. Let them know that if they are unable to “work with you” you will be required to file bankruptcy. A reduction of amount owed, lower interest rates and/or both may be possible.

In the alternative, you may want to consult with a good bankruptcy attorney. Check AVVO for one in your area. Or, go to www.Martindale.com and search for an AV rated bankruptcy attorney in your area.

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